Israel

Israel is a promising country for investors and foreigners seeking to expand their operations within the region. It has been ranked 35th in the Ease of Doing Business Index by the World Bank and ranked 12th place in the most number of start-up businesses in the world. In turn, the labor market in the country remains to have an increasing trajectory, to meet the demand of their developing business sector.

Major economic hubs:

Tel Aviv, Herzliya, Raanana, Kfar Saba, Ramat HaSharon

Skills in demand :

Accountant, Software Engineer, Marketing, Teacher, Computer Programmers

Gaining familiarity with Israel’s employment regulations is a necessary step when Onboarding employees in the country. The following section should guide you through the process compliantly.

Employee Contract

Employment contracts in Israel should be in a language that employers and employees understand. Although, English is most commonly used.

General Components of  Salary Package in Israel

Salaries are one way companies recognize and reward their employees for working hard. Salaries may include both monetary benefits like pay rates, bonuses or profit sharing agreements as well as non-monetary rewards such as health care plans with no deductibles that come straight out of your paycheck every month.

The general components of  remuneration commonly offered to employees in Israel

Resident Tax Information

All resident employees are taxed on their worldwide income in Israel. Non-residents are  taxed on their income earned and capital gained in Israeli-source income.  

The residents' personal tax has a progressive model of Tax deduction.

Social Security

There are three major social security contributions in Israel, and these are-

1. Severance Pay
2. Health Insurance
3. Study Fund
4. Pension Fund
5. National Insurance Contributions

Statutory Benefits

According to the Israel Labor law, the employer must provide the employee with the  statutory benefits mentioned below;

Israel Pension scheme

According to Israel's pension law, the employer must contribute in compensation an  amount of 6% (out of basic salary). Additionally, for pension, an amount of 6.50% (out of  basic salary) to be contributed.

Health Insurance

As per Israel's National Insurance, all individuals of Israel from the age of 18 years must  contribute to the Health Insurance. The contributions can be determined based on income.

Manager’s Insurance

The employer must contribute in compensation an amount of 8.33% (out of basic salary)  for the manager’s insurance

Maternity Leave

All the female employees are to be provided with 26 weeks of Maternity leave. The social  security of Israel compensates for the 15 weeks with paid leave; rest of the 11 weeks are  unpaid leaves.

Fringe Benefits

Employers commonly provide fringe benefits that do not form a part of an employee’s compensation. Fringe benefits are provided to an employee in addition to their regular salary. Some commonly provided fringe benefits are,

• Health insurance
• Mobile phone benefits
• Accidental death and disability benefits
• Retirement benefits

Exempt Benefits

The employee must provide the employee with the exempt benefits as per Israel’s Labor  

law. The exempt benefits in Israel are

• Social Security contributions
• Pension benefits
• Medical Insurances

Long-term Incentives

Long Term Incentives are given to the employees for the service for more than a year. In  Israel, the long term incentive benefits are mostly provided to senior employees, and the  benefits are:

• Pension benefits
• Manager’s Insurance

Termination Process

Termination is based on valid reasons and in compliance with law. It includes a hearing process explaining the reasons and the decision to be communicated in writing. Recommended to provide a termination letter in person, preferably in 48 hours after the hearing process.

Notice Period

Notice period for employees during probation and after probation varies. For the former, it will be up to 6 days while the latter is up to 21 days.

Severance Pay

Employees entitled to a severance pay after completing 1 year of service. The pay to be calculated as one month’s pay times(multiplied by) the years of employment.